PITTSFORD, N.Y., July 23 /PRNewswire/ -- The Student Loan Corporation (NYSE: STU) today reported net income of $15.9 million ($0.80 per share) for the quarter ended June 30, 1993, an increase of 44 percent over net income of $11.1 million ($0.55 per share) in the second quarter of 1992. The significant gain in net income arose as a result of an increase of $567 million in the company's student loan portfolio from year-earlier levels, and continued low funding costs. Core earnings, which exclude the benefit of floor interest rates on loans in the company's portfolio, were $9.7 million ($0.48 per share) for the quarter, up 17 percent from second quarter 1992 core earnings of $8.3 million ($0.42 per share).
The company also announced that its board of directors declared a quarterly dividend on the company's common stock of $0.06 per share. This dividend will be paid on Sept. 1, 1993 to shareholders of record on Aug. 13, 1993.
"We continued to see strong application volume this quarter, and continued increase in our key marketshare," commented Stephen C. Biklen, president and CEO.
At June 30, 1993, the company's insured student loan assets were $3.6 billion, up 5 percent over 1992 year-end balances of $3.4 billion. The company originated $124.5 million of loans in the second quarter, up 15.6 percent over second quarter 1992 originations of $107.7 million. Expenses for the quarter were $1.4 million greater than second quarter 1992, as a result of the growth in the portfolio, timing of significant marketing programs, and increased systems cost attributable to changes resulting from the 1992 Amendments to the Higher Education Act and development of the new software. Operating expenses as a percentage of average loan assets declined to 1.15 percent for the second quarter of 1993 from 1.18 percent for the same period in 1992.
Floor income, attributable to the fixed minimum rates on certain loans in the company's student loan portfolio, accounted for $6.3 million ($0.32 per share) of net income in the second quarter of 1993, compared with $2.8 million ($0.14 per share) for the second quarter in 1992. The majority of loans disbursed after October of 1992 have variable interest rates due to the changes in regulations that occurred in 1992, and do not earn floor income.
During the second quarter, both the U.S. Senate and the House of Representatives passed legislation that included implementation of direct lending to students by the federal government. In addition, the Senate legislation incorporated $4.3 billion in savings from the current student loan program. Reconciliation of the Senate and House bills is currently underway.
"With respect to these potential legislative changes, The Student Loan Corporation believes that the Senate bill provides students with greater benefits, including lower origination fees and insurance premiums, and the option of refinancing existing loans," stated Mr. Biklen. "In addition, the Senate bill allows for a sizeable test of direct lending and establishes a commission of representatives from higher education institutions to evaluate the relative merits of direct lending versus the Federal Family Education Loan Program."
"There are a number of alternatives that are being discussed today in Congress, and it is possible that the final bill will be a combination of these," Mr. Biklen continued. "We are analyzing these various possibilities and our role in the future, and we continue to feel confident that whatever we face in the future will hold opportunities for The Student Loan Corporation. We feel that we are well positioned to capitalize on opportunities regardless of the outcome of the direct lending debate."
"We have confidence that The Student Loan Corporation's financial stability, commitment to customers and products, and demonstrated emphasis on delivering quality service will serve us well in the face of this political uncertainty, as it has when we faced other demands in the highly competitive business environment in which we operate," concluded Mr. Biklen.
The Student Loan Corporation is the nation's largest originator and second largest holder of insured student loans. Citibank (New York State), a subsidiary of Citicorp, remains the largest shareholder in the company, with an 80 percent interest.
THE STUDENT LOAN CORPORATION
Balance Sheet
(Dollars in thousands)
Periods Ended June 30, 1993 Dec. 31, 1992
Assets:
Insured students loans $3,596,161 $3,426,314
Cash 278 282
Deferred tax benefits 79,124 --
Other assets 76,315 64,351
Total assets $3,751,878 $3,490,947
Liabilities:
Short-term borrowings $2,887,864 $2,759,641
Long-term notes 600,000 600,000
Payable to principal stockholder 39,562 --
Other liabilities 56,665 29,560
Total liabilities $3,584,091 $3,389,201
Stockholders' Equity:
Common stock 200 200
Additional paid-in capital 134,000 99,800
Retained earnings 33,587 1,746
Total stockholders' equity $167,787 $101,746
Total liabilities and stockholders equity $3,751,878 $3,490,947
Average insured student loans-YTD $3,552,100 $3,094,360
THE STUDENT LOAN CORPORATION
Statement of Income
(Dollars in thousands, except per share amounts and ratios)
Periods Ended Three Months Six Months
June 30, 1993 1992 1993 1992
Interest income $70,162 $64,058 $139,359 $127,928
Interest expense 32,494 37,583 64,216 76,674
Net interest income $37,668 $26,475 $75,143 $51,254
Fee income 21 39 43 73
Total income $37,689 $26,514 $75,186 $51,327
Salaries and employee
benefits 5,055 4,600 9,840 9,167
Other expenses 5,224 4,260 9,345 8,416
Total operating expenses $10,279 $8,860 $19,185 $17,583
Income before income taxes 27,410 17,654 56,001 33,744
Income taxes 11,472 6,600 22,960 12,700
Net income $15,938 $11,054 $33,041 $21,044
Earnings per common share
(Based on 20 million
average shares
outstanding) $ 0.80 $ 0.55 $ 1.65 $ 1.05
Dividends per common share
(Based on 20 million
average shares
outstanding) $ 0.06 -- $ 0.06 --
Excluding floors:
Net income $9,671 $8,386 $20,257 $16,813
Earnings per common share
(Based on 20 million
average shares
outstanding) $ 0.48 $ 0.42 $ 1.01 $ 0.84
Return on average total
assets (in percent) 1.71 1.45 1.80 1.39
Net interest margin
(in percent) 4.16 3.56 4.17 3.42
Net interest margin excluding
floors (in percent) 2.95 2.98 2.94 2.96
Operating expense as percent
of avg. loan assets 1.15 1.18 1.09 1.18
-0- 7/23/93
/CONTACT: Deborah Russell, investor 212-559-4658, or Donna Watson, investor 716-248-7187, or Maria Rullo, media 212-559-0409, all for The Student Loan Corporation/

CO: The Student Loan Corporation ST: New York IN: SU: ERN

LD -- NY009 -- 4991 07/23/93 08:27 EDT

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